Atlantic City suffering big revenue losses

TRENTON — It’s time to double down or Atlantic City may be out of the game.

According to a report, released by Moody’s Investor Services late last week, Atlantic City’s gaming industry has seen a 44 percent decline since 2006 which has significantly crippled the city’s finances.

Research indicates that Atlantic City’s loss may be Pennsylvania’s winnings. The Keystone State collects $1.5 billion in gaming taxes — the highest in the country — since opening its first casino in 2006. Although Pennsylvania may bring in the highest tax revenue in the country, Nevada still stands as the largest gaming industry in the country. However, Sin City has not fully bounced back from the recent economic recession bringing in only $885 million in gaming tax revenue.

New Jersey has seen an more than a $2 billion loss in revenue, over the last decade, as gaming laws have changed allowing neighboring states to get a lion’s share of gambling revenue. Casino metropolises have sprung up throughout Pennsylvania, New York, Delaware and Maryland.

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“We have lost the day visitor,” said a spokesperson for The New Jersey Casino Control Commission who asked not to be named. “It used to be that people, in the tri-state area, who were itching to visit a casino would take a day trip to Atlantic City, but now they choose to go to a casino that is closer to them.”

The city’s finances have seen a sharp decline as a result of the lower number of gamblers. Casinos contribute 70 percent of Atlantic City’s assessed tax values. The loss in gaming revenue and a loss in hotel occupancy tax revenues have created a huge budget gap at the end of each fiscal year since 2006. In an effort to keep tax levies up the city has increased the property tax rate enough to grow the levy each year. However, in 2013 the rate increase did not provide the necessary revenue to keep the city’s finances stable forcing officials to use a loan from the Federal Emergency Management Agency related to Superstorm Sandy to minimize the tax loss beyond 2013 and city officials say they plan to continue to increase the property tax rate to offset assessed value declines.

As a way to appeal to non-gamblers, The Atlantic City Alliance launched a $20 million ad campaign in 2012. The campaign “Do Anything, Do Everything, Do AC” included television, radio, billboards, print ads in newspapers and magazines, digital and a sizable social media effort in the close-by drive markets — New York, Philadelphia and Baltimore. Although initial research deemed the campaign successful, there wasn’t enough of an economic lift to offset the years of revenue loss.

In 2012, the city hoped a new high end casino, Revel, would be a turning point and would kick-start Atlantic City’s dismal economy. However, less than a year after its grand opening, the upscale resort type casino filed for Chapter 11 bankruptcy protection in March 2013 citing its inability to lure high rollers into their state-of-the-art, non-smoking gaming area.

New Jersey’s loss may be Pennsylvania’s gain. According to Moody’s estimates Pennsylvania has generated over $3.2 billion in revenue from its 11 existing casinos. In the eight years since Pennsylvania legalized casino gaming, the state has used the tax revenues for various purposes such as providing tax relief for senior citizens and people with disabilities and to supplement school districts resulting in nearly $200 per household savings in 2009-2010.

As a way to level the playing field and to combat the rising competition, Atlantic City is looking to expand the types of games they offer players and to make the beach front area a “staycation” destination for both gamblers and non-casino players alike.

A spokesperson for the state’s Casino Control Commission boasted about the increased safety on the city’s streets, numerous high-end spas and restaurants and Atlantic City’s newer outlet mall, located minutes away from the boardwalk.

Earlier this year the state’s gaming commission temporarily legalized fantasy sports betting in a pilot program. Players who “draft” a pool of athletes can follow their game statistics while at the casino and compete against other fantasy teams. Casinos accept entry fees from gamblers and pay out winnings from the casino cash cages.

In another attempt to provide more gaming options, Gov. Chris Christie is taking his fight to allow real-life sports betting, to the Supreme Court. In 2012 the four major professional leagues and the NCAA blocked a sports betting referendum allowing N.J. gamers to place bets on professional games. After two appeals, New Jersey faced another upset last week when the Third U.S. Circuit Court shot down the state’s request to legalize sports betting in Atlantic City casinos. Not down for the count, Gov. Christie decided to take his case to the Supreme Court, and believes New Jersey has a “pretty good chance” of having the case heard in the nation’s highest court.

About the Author

After being laid off from American Express, Sherrina went back to school and got a masters from C.U.N.Y. She isn't scared to ask tough questions and enjoys getting the story behind the story. Reach the author at Snavani@trentonian.com
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